PSEG says initial rollout of time-of-day pricing suggests shift away from peak hour usage

Now that half of LIPA’s residential electric customers have been migrated to a new rate program called Time-of-Day, big questions loom about whether rate-weary customers can train themselves to shift away from peak hour use.

Much is at stake as PSEG Long Island, which manages the grid for LIPA, works to deliver on a plan LIPA initiated more than two years ago, after spending hundreds of millions of dollars transitioning Long Island homes to smart meters that allow for down-to-the minute usage monitoring.

Early signs are good. The first half of the transition of LIPA’s 1.1 million customers has gone off smoothly, PSEG says, and there are signs early adopters are aware of the program and starting to alter usage patterns.

"It’s working to a degree," said Mike Voltz, director of PSEG’s energy efficiency and renewables programs. A poll conducted of those who were shifted over found 80% said they were aware of the program they were on and "most are taking some action" to reduce peak usage, Voltz said.

"As customers gain experience with the new Time-of-Day rates, we expect that even small behavioral changes will lead to additional savings opportunities individually and for all customers," PSEG spokeswoman Elizabeth Flagler said in an email. 

As of the end of June, just over 491,000 customers had been shifted to the now-standard time-of-day rate after a large-scale migration started in January, according to PSEG. Another 10,000 customers voluntarily opted-in for a new rate called Super Off-Peak that promises greater savings if customers can shift even more usage even farther from the daily peak of 3 to 7 p.m.

New York State raised issues about the program and its potential impact on customers who opted out in a filing in 2023, when LIPA approved it. But after a delay in the rollout, PSEG is moving along with a plan to shift 95,000 customers a month to the new plan.

It’s too soon to tell if everyone who has been shifted over is saving money or having noticeable impacts on lowering peak grid demand but early signals are good, Voltz said.

That will come with a full year of customer data, he said. The remainder of LIPA’s customers will be migrated to the new rate after the transition restarts in September and finishes in December.

All customers who were migrated to the new rate can opt out by visiting their PSEG account online or calling customer service.

Early savings 

A review of the first 30,000 customers who migrated last year found  they experienced an average 2% reduction in their bill, or around $5 a month, as a result of the program, Voltz said.

Customers contacted by Newsday last week said while they were aware of the new rate, and tried to avoid nonessential use during the daily peak period, they also said the rate wasn’t making a huge difference in their bills. LIPA in the past has said even customers who don’t change their habits will see only a small upward fluctuation.

"It’s just a little bit to my advantage," said Rick Hamberger, a retired economist from Roslyn Harbor. "There’s only so many things you can control."

Hamberger and his wife have a pool with a filter pump that runs 12 hours a day, and their home's central air conditioning is almost always on. If the couple goes out in the afternoon, he’ll turn the thermostat up to 74 degrees from their usual 72, but he’s not about to roast at home to save a few more dollars.

"I like it cooler," he said. "We could turn it off and open the windows on cooler days, but you just get used to having it."

He does delay laundry and the dishwasher use to nonpeak hours.

Laurie Wheelock, executive director for the Public Utility Law Project, a utility watchdog group, said customers worried about the rates should call PSEG customer service for a primer on how they work. The phone number is 800-490-0025.

"You can ask them to walk you through your prior billing history, check your usage and pricing," Wheelock said.

Because customers who stay conscious of their usage and stay on schedule can save money on electric bills, her group "would recommend checking with PSEG about the super off-peak rate and the details involved," to help lower bills, Wheelock said.

How it works

Peak power is the most expensive energy PSEG buys, chiefly because power is in greater demand during the summer peaks, constraining supply and raising prices. A bottleneck between upstate and downstate, where demand is greater, also hikes peak prices.

Voltz said many customers are, like Hamberger, addressing the low-hanging fruit of avoiding the peak by shifting usage of dishwashers and laundry appliances to the off-peak times.

Others with more serious ambitions for cutting usage and saving money have shifted power-hungry devices like pool pumps and electric vehicle chargers to the off hours. With super off-peak, they can program car chargers to turn on at night and cut the rate significantly.

PSEG bills have three main elements to watch when calculating usage and costs: the daily service charge, which stays steady for most customers all year at 54 cents a day, the delivery charge and the power supply charge. With time-of-use rates, the delivery and power supply charges vary depending on when you use power. PSEG publishes updated charges monthly on its website. 

For the month of July, the power supply charge for the standard time-of-day rate (known as Rate 194), was 23 cents per kilowatt-hour for peak hours and 9.8 cents for all other hours and weekends.

For the super off-peak, also known as Rate 195, the peak rate is 20.4 cents for usage between 3 and 7 p.m., 7.1 cents for the overnight hours between 10 p.m. and 6 a.m., and 11.8 cents for all other hours. Peak-power premiums don’t apply on weekends and holidays. Rates also shift in the lower-use winter. 

Compared with variable time-of-day rates, the standard flat rate, known as Rate 180, has a power supply charge of 11.8 cents for all usage. It varies month to month.

The other main element of the bill, the delivery charge schedule of rates, stays the same all year, but there are variations in those for different rates and peak versus nonpeak hours. A brochure showing all the rates is also available on PSEG's website. 

For the standard time-of-day rate, the delivery charge for peak usage is 21.27 cents a kilowatt-hour, while the off-peak charge drops to 10.49 cents a kilowatt-hour.

For super off-peak, the delivery charge is 28.6 cents for peak hours, 4.3 cents for the overnight 10 p.m. to 6 a.m. period, and 13.3 cents for all other hours.

For the flat rate, the delivery charge is 10 cents for the first 250 kilowatt-hours and 12.9 cents for all usage in excess.

Customers on the new rate plan have an extra incentive to stay. The utility has offered them a money-back guarantee if the new rate costs them more over their prior fixed rate. It will appear as a credit on next year’s bill.

But beware, there are some r estrictions on who can get it. Check out the restrictions posted on PSEG’s website.

 Eligibility

Not everyone is eligible to make the switch to the new rates. PSEG and LIPA have decided not to automatically switch over around 50,000 all-electric customers whose homes are heated via electricity and who get a special heating discount rate in winter, Voltz said. The utility is working on a new rate that could help those customers, he said.

Despite a summer of high heat, it's too early to say if the LIPA system overall saw a peak-time reduction during some of the high-heat days this summer, Voltz said, though PSEG is working to compute that. Other curtailment programs using the 500 Long Island customers with home storage batteries to inject their power into the system at the peak did work to reduce the peak load, Voltz noted.

Marvin Kirschenbaum, a ratepayer from Plainview, rolled with the new time-of-use rates even though he has leased solar panels, which can further complicate the picture because solar credits are now banked in peak and off-peak accounts. He charges his car overnight and gets the super off-peak rate. He’s not sure if the math is working in his favor, but he suspects so.

"My bills are going down. At least I think they are," Kirshenbaum said.

Voltz said customers can access their PSEG MyAccount app to monitor their usage down to the hour, and the utility provides a calculator to compare older usage to newer to determine if it’s best to switch and which plan is best. It’ll stay up even after all customers are shifted to the new rate.

Some customers with in-home storage batteries can take advantage of the time-of-use rates to rack up revenue, charging their systems at the cheapest super off-peak rate at night and selling the power back to LIPA during the peak hours. They can do it every weekday, though it’s unclear if that regular cycling of batteries can impede battery life.

Most customers are staying with the new rate, Voltz said. At present, the acceptance rate is 98% with only around 2% opting out for any number of reasons.

"Some customers just don’t want to be bothered," Voltz said. "Some don’t want to deal with it." Others such as customers on medical equipment may have a "significant need for use during those hours," he said. 

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.